Reducing the rent

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    Reducing the rent

    One of two tenants vacated the house and I decided to offer the remaining tenant a new AST at half the rent. What will the tax people say about it? I heard one cannot rent a property below market value.

    #2
    You are allowed to rent out at below market rate but you may not be allowed to claim expenses exceeding the reduced rental income.

    Comment


      #3
      Originally posted by londiner View Post
      I heard one cannot rent a property below market value.
      What could this sentence even mean? Market value is effectively completely subjective. There are plenty of Landlords out there who let a property in, say, 2010 and haven't raised the rent once... they are obviously letting a property below market value. The concept - and even more, how it would ever be policed - doesn't make much sense to me.

      Comment


        #4
        Originally posted by Gordon999 View Post
        You are allowed to rent out at below market rate but you may not be allowed to claim expenses exceeding the reduced rental income.
        This makes sense to me now that you mention it. But I would imagine that the total annual expense must not exceed the annual total rent though in one or more months expense may exceed the monthly rent.

        Originally posted by Hippogriff View Post
        What could this sentence even mean? Market value is effectively completely subjective. There are plenty of Landlords out there who let a property in, say, 2010 and haven't raised the rent once... they are obviously letting a property below market value. The concept - and even more, how it would ever be policed - doesn't make much sense to me.
        Hippo I read somewhere that the taxman may require a LL to show him the lettings contract when the rent is suddenly reduced below market level. But I was not thinking of those lettings that have not kept up with market value comparable to other similar properties in a given neighbourhood. Thanks for pointing out it is not illegal; I was unsure about that.

        Comment


          #5
          I understand the taxman has wide powers to challenge what they suspect is dodgy (employment & pay, VaT affairs, landlords suddenly reducing rent for that particular tenant...) and have heard it suggested they can tax you on the basis of "market" rent. But yet to find evidence thereof. I do hope it is true.. (Don;t like crooks, be they landlords, tenants, MPs, multi-national-companies, etc etc,....)
          I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

          Comment


            #6
            Where would be the crookery if I wanted to reduce the rent on one of my properties? I'd still pay tax on the income received... I'm not notionally decreasing the rent, but pocketing the other part silently. I am confused by the implications here.

            I decide the rent on the property I let. I can go above market rate, dead on whatever I think market rate is, or a bit lower than market rate... my reasons would, surely, be my own?

            Someone selling a product usually has the right to set the price of that product.

            Comment


              #7
              Ah, the innocence of youth.....

              Place is worth, market, £1000/month. Landlord & tenant agree & sign an AST @ £500 a month, but with tenant giving cash extra £400 a month, no records of any nature..... See what they did there?? It happens...

              Or, the other way... Place is worth, market, £325/month but HB/LHA rate is £475/month. AST signed @ £475, all paid direct by HB/LHA, then landlord gives tenant £25/month cash.. See what they did there?? It happens....
              I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

              Comment


                #8
                Of course, but not applicable to what I had asked... no person or entity should be able to influence what I let my property for, assuming all is above board. I could have a very good reason for letting a property 'the market' says is worth £700 for £500. That reason might be personal to me and is the business of no-one.

                They can certainly not tax me on income I've not received, based on some assessment of market rate that I may not agree with.

                This all sounds crazy (to me).

                Comment

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